An Echelon Media Company
Sunday September 24th, 2023

Sri Lanka’s SEC approves new listing board and rules for SOEs

ECONOMYNEXT – Sri Lanka’s capital market regulator has approved the creation of a separate listing board and listing rules at the Colombo Stock Exchange (CSE) for state-owned enterprises’ (SOEs) expected entry into the bourse.

The salient features of the rules applicable to the new Board include a stated capital of not less that 250 million rupees revenue, net asset and market capitalization tests, minimum 3 years operating history, time–bound requirements for financial reporting, and a minimum 10 percent public float with 300 public shareholder requirement.

“These rules were developed under the guidance and direction provided by the SEC to the CSE, and include consultations with, and inputs by, the SOE Restructuring Unit of the Government and the Auditor General,” the Securities and Exchange Commission of Sri Lanka (SEC) said in a statement.

The SEC said this was in response to a government policy to expedite reforms in SOEs.

The government, in a drive to raise revenue and reduce expenditure, is seeking to improve SOEs’ governance, efficiency, productivity and profitability.

“The aim of the policy is to make them market-oriented,” Minister Bandula Gunawardana told reporters previously.

Generally, companies listed on the stock exchange have better financial accountability as they are answerable to investors. Listing also ensures effective monitoring of compliance of the issuer.

“If you take a listed company with 1,000 shareholders, these entities are compelled to publish quarterly and annual accounts,” Sri Lanka State Enterprise Restructuring Unit, Director General Suresh Shah told a forum organized by the Asian Development Bank, earlier this month.

“SOEs have 22 million shareholders but do not have to give quarterly as well as annual accounts,” Shah pointed out.

Most Sri Lankan SOEs, which are reporting losses, have traditionally relied on government funding and borrowings to function.

The corporate governance requirements under the new SEC rules will be the same as those applicable to the Main Board and Diri Savi Board with a view to aligning the internal governance structures and processes of listed SOEs with the standards set in the market.

“The dismal performance of many SOEs in Sri Lanka have become a heavy fiscal burden upon the country with significant macroeconomic implications,” the SEC said.

“The SEC and the CSE have given due consideration to the current levels of governance, organization structure and operational challenges prevailing in the SOE sector and have therefore created a separate Listing Board and Listing rules with a view to enabling SOEs to progressively transition from what they are now to what they should be,” the SEC said.

“Any SOE that meets the Listing criteria of the Main Board or the Diri Savi Board can straightaway list on those Boards,” Tushara Jayaratne, Deputy Director General, SEC said. (Colombo/Sep13/2023)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka India industrial zone around Trinco, maritime links mooted

ECONOMYNEXT – Sri Lanka’s Ports Minister Nimal Siripala de Silva had highlighted the desire of both the Governments to work closely to develop the industrial zone at Trincomalee, after accepting an invitation to participate in a maritime summit.

The Global Maritime India Summit (GMIS) will be held in India from October 17-19, 2023 at Mumbai where Sri Lanka has been invited at a partner country.

At a curtain raiser event on September 22, India’s High Commissioner in Colombo, Gopal Baglay had said both countries were working on enhancing sea connectivity according to a vision document launched during a recent visit of the President of Sri Lanka to India.

Minister de Silva will lead a delegation from Sri Lanka to the summit.

Secretary to the Ministry of Ports, Shipping and Waterways, Government of India, T K Ramachandran said the Global Maritime India Summit aims strengthen the Indian maritime economy by promoting global and regional partnerships and facilitating investments.

The event will give an opportunity to the Government of Sri Lanka to attracting greater investment from India in development of its maritime infrastructure, Ramachandran said.

It will also facilitate greater business to business interactions. (Colombo/Sept24/2023)

Continue Reading

Sri Lanka brings back import para tariff on milk

ECONOMYNEXT – Sri Lanka has brought back an import para tariff called the Ports and Airports Levy, to several grades of milk powder.

Milk powder has been removed from a list of PAL exemptions, making them liable for a 10 percent tax.

The PAL para tariffs are also a contentious issue in terms of export competitiveness, and the government has previously given undertakings that they will be eliminated.

Trade freedoms of the poor figure in an IMF/World bank reform program with the governments.

Milk is a protein rich food, in a country where children of poor families are facing stunting and malnutrition.

Economic nationalism is seen at high levels in food, with several businessmen are pushing for trade protection, amid an overall autarkist (self-sufficiency) ideology, going directly against policies followed in East Asia, which the same as hold up as examples.

Sri Lanka keeps dairy product prices up ostensibly to bring profits to a domestic dairy company and farmers.

Sri Lanka also keeps maize prices up, ostensibly to give profits to farmers and collectors. (Colombo/Sept22/2023)

Continue Reading

Sri Lanka govt warns liquor manufacturers: pay defaulted tax or lose licence

ECONOMYNEXT – Sri Lanka government which is struggling to raise the state revenue despite   higher taxes, has warned liquor manufacturers to pay defaulted taxes or lose their licence.

The government is now getting tough with past tax defaulters amid concerns over falling short of this year’s revenue target agreed with the International Monetary Fun (IMF).

“Liquor manufacturing firms owe us 660 crore rupees (6.6 billion rupees),” Siyambalapitiya told  reporters on Thursday (21).

“Most of this or around a third is the only excise tax amount to be paid. The rest is penalty. If a liquor manufacturer does not pay on time, we impose a penalty of 3 percent per month This means 36 percent (penalty) per annum,” he said.

“We have given them deadline to repay the basic excise taxes. If they don’t pay, we will cancel their licence.”

President Ranil Wickremesinghe’s government committed an ambitious revenue target among many other reforms to the International Monetary Fund (IMF) in return to a $3 billion loan package.

However, the revenue could face a short fall of 100 billion rupees, State Finance Minister Ranjith Siyambalapitiya has said.

A new Central Bank Act also has legally prevented the government of printing money at its discretion as  in the past.  (Colombo/September 24/2023)

Continue Reading